The Shutdown Showdown

For once, Minnesota Dems take a hard line with Pawlenty

For those who believe in the principles of collective apathy and cynicism, the first state government shutdown in Minnesota history is a golden opportunity to declare a pox on the houses of all legislators for "failing to get the job done." The "job," by the terms of this criticism, is settling the affairs of the state without cutting services or raising taxes, and getting it done without unseemly bickering, so we can gnaw on a turkey leg and enjoy Dennis De Young playing the music of Styx at Taste of Minnesota in peace.

Unfortunately, a little ruckus over the setting of the state budget is in order, and probably overdue. Over the past six years, no other state in the nation has experienced a more dramatic shift in its traditional political character and philosophy than has Minnesota. Try as we might to avoid them, the ramifications of that sea change inevitably have to be acknowledged.

First, a little background. Six years ago, the Minnesota Legislature passed a biennial budget that contained $2.7 billion worth of tax relief--more than twice as large, per capita, as any other state tax cut in the country. A year later, in a non-budget session, legislators returned hundreds of millions of dollars in surplus money through further cuts in income taxes and car license fees. For the 2002-'03 biennial budget, they executed a "big fix" by drastically lowering property taxes (especially on high-priced homes, businesses, and agricultural land), rebated $700 million in sales taxes back to citizens, and had the state replace local units of government as the source of $1 billion worth of education funding.

Courtesy of the Minnesota Senate

Far from being a partisan hardliner, Democratic Senate leader Dean Johnson was a Republican for two decades

Having disgorged billions of dollars in excess revenue back to Minnesotans while simultaneously reducing the state's ability to bring in money and increasing the state's financial obligations, legislators left the state treasury uniquely vulnerable when the dot-com bubble burst shortly after the turn of the century. In 2002, then-Governor Ventura proposed a significant package of tax increases and spending cuts to begin to address the problem. But a pair of legislative leaders running for governor that year, Sen. Roger Moe and Rep. Tim Pawlenty, instead struck a deal to essentially postpone reckoning on the budget, shifting costs and instituting insidious gimmicks such as counting the dollars inflation adds to the state's coffers but ignoring those same adjustments when calibrating the cost of government services.

Consequently, two years ago, the newly elected Governor Pawlenty faced a whopping $4.2 billion deficit in the pending biennial budget, a situation made more intractable by his campaign pledge not to raise taxes. Even after raiding every funding source he could find, he had to hack more than $2 billion worth of services to balance the budget. A showdown seemed to loom with Senate Democrats, who had passed $1.2 billion worth of tax increases in an attempt to recoup a mere fraction of the various tax cuts that had been enacted in the previous four years. But in May 2003, then-Senate Majority Leader John Hottinger not only stopped pushing for a tax increase but abruptly reversed course and offered to supply Pawlenty with three DFL votes in the Senate to enact the governor's agenda. Hottinger said he caved in after deciding that Pawlenty would sooner shut down the government than agree to a tax increase.

In this year's budget fight, Hottinger has been replaced by Sen. Dean Johnson. On the Almanac public television program last Friday, Senate Minority Leader Dick Day blamed the shutdown on Johnson, saying that "the Senate was mismanaged. I was there for many years with [Majority Leader] Moe, and with Senator Hottinger we put a deal together. The only difference this time is Senator Johnson." But after Hottinger caved in 2003, here is how Day described the "deal" they put together with the Democrats: "They can all go home. We'll run the conference committee. We'll run everything." Perhaps what Day meant to say this time was that Johnson was "unmanageable."

Ironically, Johnson was a Republican for more than two decades before changing parties five years ago. One measure of how hard Minnesota politics has tacked to the right in recent years is the wealth of cogent and perceptive criticism launched against Pawlenty's policies by Republican moderates, including former Gov. Arne Carlson and his finance commissioner John Gunyou, former Sen. Dave Durenburger, and current House Transportation Chair Ron Erhardt. These people all governed in a spirit of bipartisan compromise. Earlier this session, in fact, Erhardt shepherded through a bipartisan transportation bill that Pawlenty promptly vetoed.

Pawlenty's transportation "plan," which Gunyou has labeled "insane," is to ask voters to approve the raiding of literally billions of dollars from the general fund, depriving education and health care programs of hundreds of millions of dollars in revenue. As it already stands, Minnesota's per-pupil funding for education is below the national average. And Pawlenty is proposing to deprive tens of thousands of people of state-supported health insurance while raiding the fund dedicated to health care for the third year in a row.

"We put an 8 percent [budget] increase on the table and we can fund our important priorities with that--schools, health care," Pawlenty said on Almanac. But if you add the inflation factor Pawlenty and Moe removed three years ago, and also consider the growth in the state's population, his state budget proposal actually amounts to a real dollar decline per capita.